Companies seeking to buy earnings growth and finance deals cheaply will buoy a strong second half for mergers and acquisitions, despite concerns about rising asset valuations, an ­Intralinks survey says.

The virtual data room company drew on analysis of early stage sell-side deals to predict global announced merger and acquisition volumes will post an annual increase this year, the first time since 2010. The deal flow indicator suggests an annual rise of 6 per cent to 10 per cent compared to 2013.

In a separate June poll of the sentiment of more than 1000 M&A professionals, including bankers and lawyers, the prevailing view was also positive.

For the Asia Pacific region, 80 per cent of dealmakers said they expected transaction volumes to increase over the next six months, compared to 77 per cent of global respondents, the survey shows.

Those involved in Asia Pacific deals identified the energy and power sectors as the most active, and some 56 per cent expected shareholder activism would continue to increase.

“People are chasing yield and growth, but it is hard to build that growth and do it organically." Intralinks’ vice president of M&A strategy Matt Porzio told The Australian Financial Review.

“Deal activity begets more activity ."

Australia continued to benefit from acquirers viewing this market as “the gateway to Asia", he said.

Related Quotes

Company Profile

But the Intralinks poll also shows bankers and lawyers view climbing asset valuations as the greatest impediment to completing the deals over the next 12 months.

Intralinks accounts for more than 30 per cent of the market for virtual data rooms.

Mr Porzio said the biggest external threats to the outlook continued to be political instability and macroeconomic or financial shocks.

Locally, there is also optimism on the deal pipeline.

Herbert Smith Freehills mergers partner
Tony Damian
said there were clear signs that merger and acquisition activity had returned strongly this year and all indications suggested this would continue.

“Contested deals are never a bad sign that there is a real willingness to execute transactions," he said.

Herbert Smith Freehills is working on deals such as
Roc Oil
’s merger with
Horizon Oil
, which has attracted interest from potential interlopers. Other notable deals in this market include Expedia’s offer for
Wotif.com
, and
Woolworths
’ tilt at
David Jones
.

On activist funds, Mr Damian was also of the view they will step up their activity in Australia.

“There isn’t anything to convince me that we are not going to see activist funds out here in the fullness of time.

The move from occasional local activist involvement, to global fund establishment in Australia, is not too far away."

Favourable financing markets are also conducive to transaction activity.